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New Jersey Statutory Update – Part III Banner Image

New Jersey Statutory Update – Part III

Month: October 2023

New Jersey Statutory Update – Part III

Posted on by Jessica Civetta

Part III continues to focus on New Jersey statutes that impact healthcare and have been approved by the New Jersey Legislature and Governor. Part III includes legislation on drug pricing, pharmacy benefit managers, and New Jersey’s False Claims Act

New Jersey Expands Data and Transparency System for Prescription Drug Supply Chain

Approved Bill S1615 addresses prescription drug prices and implements new data reporting requirements across the prescription drug supply chain. The Bill requires the Division of Consumer Affairs (the “Division”) to publish emerging trends in prescription drug pricing annually.

Drug manufacturers, including product packagers, repackagers, labelers, relabelers, and distributors, will be subject to the reporting requirements if they increase the wholesale acquisition cost (“WAC”) of: (1) a brand drug by more than 10% during any 12-month period; (2) a generic drug priced between $10 to $100 by more than 40% during any 12-month period; or (3) a generic brand priced $100 or more by more than 10% during any 12-month period.

Manufacturers must provide written notice of such price increases to the Division within 10 days following the effective date and the Division will notify consumers of the increase on its website. Manufacturers must also report to the Division within 20 days of the price increase the following: proprietary and non-proprietary drug names, pricing units, volume, sales, revenue, and annual changes in prescription drug transactions. The Bill provides similar reporting and notification requirements for manufacturers related to market introduction of drugs.

The Bill also imposes reporting requirements on Pharmacy Benefits Managers (“PBMs”), including total rebates, discounts, and price concessions received or negotiated by PBMs with the manufacturer for each drug. The Division may audit the data submitted by any reporting entity at a cost covered entirely by the entity and may require the entity to submit a corrective action plan to correct any deficiencies.

Lastly, the Bill establishes the Drug Affordability Council to review the reports submitted and collect data to formulate legislative and regulatory recommendations to address the drug pricing. Each member of the council must have expertise in healthcare economics, healthcare policy, or clinical medicine.

New Jersey Extends Time Allowed for Involuntary Civil Commitment for Mental Health Treatment

Approved Bill S3929 amends N.J.S.A. 30:4-27.1 et seq. to allow a general hospital, short-term care or psychiatric facility, or special psychiatric hospital to detain a person, admitted involuntarily, for an additional 72 hours from the time a screening certificate is executed. Within 24 hours of admission, the facility should initiate court proceedings for the involuntary commitment and request a temporary court order permitting the continued hold pending a date of the involuntary commitment hearing. This hearing should take place no more than 20 days from the initial commitment.

Prior to this Bill, the facility could not detain a person admitted involuntarily for more than 72 hours; however, under the amendment, if a temporary court order has not been rendered within the first 72 hours, or a temporary court order had been granted, but the admitting facility does not have the capacity to accommodate the person, the facility may detain the person for an additional 72 hours.

The facility may detain them for this additional time if: (1) the person is reevaluated by a psychiatrist at least once every 24 hours; (2) the evaluating psychiatrist recommends the person be detained due to risk of rehospitalization or if the person is a danger to themselves or others; and (3) the person is not detained for a total of more than 144 hours from the time the screening certificate was executed.

The Bill took effect immediately on August 16, 2023, and ends after two years.

New Jersey Revises State False Claims Act to Comply with Federal Law for Enhanced Medicaid Fraud Recoveries

Approved Bill A5584 revises N.J.S.A. 2A:32C-1 et seq., New Jersey’s False Claims Act (“FCA”), to conform with federal law in which the State is eligible for greater recoveries in Medicaid fraud cases.

Under federal law, a state is entitled to enhanced recovery in Medicaid fraud cases if the Inspector General of the Department of Health and Human Services determines the state’s FCA is “at least as effective” as the federal FCA in furthering whistleblower actions. The Inspector General determined New Jersey’s FCA was not as effective as the federal FCA and recommended the State make modifications.

This Bill implements the Inspector General’s suggestions and modifies the State’s definition of the term “claim,” to better align with the federal definition, and adds definitions of the terms “material” and “obligation” to the statute. The Bill also adds language to better understand the remedies available under the federal FCA and the calculations for the State’s share of New Jersey FCA claim recoveries.

New Jersey Increases Medicaid Reimbursement Rate for Adult Living Facilities

The New Jersey Legislature approved Bill S405 to codify and increase Medicaid per diem reimbursement rates for assisted living facilities, comprehensive personal care homes, and assisted living programs.

The Bill provides tiered increases in reimbursement rates to assisted living residences, comprehensive personal care homes, and assisted living programs with a minimum per diem rate of $89.50, $79.50, and $89.50, respectively, for each Medicaid beneficiary under their care. Additionally, assisted living residences and comprehensive personal care homes are to receive an increased per diem rate based on the percentage of Medicaid beneficiary residents at their facility.

Accordingly, a facility with a Medicaid beneficiary population of: (a) 15-30% of the total resident population will receive a per diem rate that is $10 higher than the minimum; (b) 30-50% of the total resident population will receive a $15 higher per diem rate than the minimum; (c) 50-70% of the total resident population will receive a $30 higher per diem rate than the minimum; and (d) at least a 70% of the total resident population will receive a $35 higher per diem rate than the minimum.

The Medicaid beneficiary population percentage will be determined on a yearly basis.

Appeals Court Clarifies Procedures for Hearing Requests and Appeals from DEP Decisions

Posted on by Christie Bowness

In its reported decision in Musconetcong Watershed Association v. New Jersey Department of Environmental Protection, the Appellate Division provided much needed clarification of the procedures for challenging New Jersey Department of Environmental Protection (“NJDEP” or the “Department”) determinations, including permits.  The court held that the time for the Musconetcong Watershed Association (“MW Association”) to appeal a flood hazard area applicability determination (“FHA Determination”) to the Appellate Division did not begin to run until the Department decided on MW Association’s request for an adjudicatory hearing.  An adjudicatory hearing, also known as a “contested case” under the State Administrative Procedure Act, is a trial-type proceeding usually held before an administrative law judge in the Office of Administrative Law to create a record for decisions of agencies like NJDEP. The court also criticized the Department for taking four years to decide whether to grant MW Association’s hearing request, and it issued a ruling intended to speed up NJDEP’s decisions on hearing requests.  Although the four-year delay in this case was extreme, NJDEP typically has been slow to respond to hearing requests.  Because of these delays, and before this case clarified that NJDEP’s underlying decision was not final while the hearing request was pending, parties challenging NJDEP decisions had been forced to pursue litigation in the Appellate Division even before NJDEP decided whether the challenge would be heard in an adjudicatory hearing.

In 2016, developer Hampton Farm applied for an FHA Determination to confirm that a man-made swale was not a flood hazard area and therefore did not require a flood hazard area permit. NJDEP issued an FHA Determination in early 2017, confirming that the swale did not require a permit. Shortly thereafter, MW Association, an environmental group whose affiliate had submitted public comments to NJDEP challenging the sufficiency of Hampton Farm’s application, requested the Department conduct an adjudicatory hearing on the matter. Following four years of silence, NJDEP finally denied the hearing request in 2021.  MW Association subsequently appealed both the denial of its hearing request and the underlying 2017 FHA Determination. Before the case was briefed and argued on the merits, NJDEP argued by motion in the Appellate Division that the court should not hear MW Association’s challenge to the 2017 FHA Determination because the appeal was not filed in 2017, within forty-five days of the determination. In general, under the New Jersey court rules, an appeal must be filed within forty-five days of a final determination by NJDEP. A motions panel of the Appellate Division agreed with the Department and limited the scope of the appeal to NJDEP’s denial of MW Association’s hearing request. But the merits panel of the Appellate Division that ultimately decided the case reversed the motions panel and held instead that MW Association’s appeal from the 2017 FHA Determination was preserved because that decision did not become final, and thus appealable, until NJDEP denied the hearing request in 2021.

The Appellate Division’s decision relied on the doctrine of exhaustion of administrative remedies, which requires parties challenging agency decisions to avail themselves of internal agency appeals processes before challenging the decision in court.  The court explained that, although NJDEP was correct to deny MW Association’s hearing request because the Flood Hazard Area Control Act does not grant hearing rights to third-party permit objectors and MW Association did not have a constitutional right to an adjudicatory hearing, MW Association’s administrative remedies were not exhausted until NJDEP made a decision on the hearing request. “[W]hile the request was pending, no one knew whether the DEP would determine that there was a statutory right or a particularized property interest warranting an adjudicatory hearing.” There was no final agency action for MW Association to appeal from until NJDEP denied the hearing request in 2021.

The court directed the parties to file supplemental briefs addressing whether there is any time limit within which NJDEP must respond to a hearing request. In defending its four-year delay, the Department took the position that there was no such time limit in this case because neither the Flood Hazard Area Control Act nor NJDEP’s regulations promulgated under that act establish one. The court disagreed: “The public should be able to count on the DEP to turn square corners by making timely decisions.” The court relied on an existing provision of the Uniform Administrative Procedure Rules, N.J.A.C. 1:1-4.1(a), to impose new time constraints on NJDEP’s decisions on hearing requests. That rule allows any party to petition the agency to determine whether a matter is a contested case and requires that such determination be made within thirty days. So, the Court held, because a party that requests an adjudicatory hearing “is effectively contending that the administrative matter is a contested matter,” that party can petition NJDEP to decide its pending request for an adjudicatory hearing, and N.J.A.C. 1:1-4.1(a) requires NJDEP to decide within thirty days.

Because NJDEP has not sought review of the decision in the New Jersey Supreme Court, it now is bound by the court’s mandate in Musconetcong to speed up its consideration of adjudicatory hearing requests. It remains to be seen how the Department will apply this mandate in practice.  There is no apparent enforcement mechanism for the thirty-day deadline to respond in the Uniform Administrative Procedure Rules as applied in the case, so the administrative burdens of meeting this deadline may limit NJDEP’s compliance.  On the other hand, the burdens may not be onerous in many cases.  For example, the law is clear that third-party environmental groups objecting to NJDEP permits, like MW Association, are not entitled to adjudicatory hearings to challenge the Department’s permitting decisions.  The court appropriately observed that parties requesting hearings should receive a timely decision determining the appropriate venue for their challenge to NJDEP.  In Musconetcong, the correct venue clearly was the Appellate Division, so perhaps it will not be too difficult for the Department to speed up its process for deciding hearing requests in many cases.

For more information, please contact the author Michael Antzoulis at mantzoulis@riker.com or any attorney in our Environmental Practice Group.

New Jersey Statutory Update – Part II

Posted on by Christie Bowness

Part II continues to focus on New Jersey statutes that impact health care and have been approved by the New Jersey Legislature and Governor including a new statute that regulates pharmacy benefit managers.

New Jersey Further Regulates Pharmacy Benefit Managers

Approved Bill A536 supplements Title 17B of the New Jersey Statutes and provides more oversight of Pharmacy Benefit Managers (“PBMs”), the third-party companies who manage prescription drug plans, to address prescription affordability and business activities. The Bill first prohibits any business entity from acting as a PBM without the proper licensure from the State. It also establishes new transparency standards, data and record reporting requirements and cost establishment modifications.

It requires any funds that the PBMs receive for their services to be credited to the patient at the point of sale or to the carrier to offset premiums. The bill also precludes a carrier from entering a contract with PBMs that prohibits the pharmacy from providing patients the option of paying for their prescription in cash instead of filing a claim with their carrier if the cash price is less than the patient’s cost-sharing amount.

A carrier, or PBM under contract with a carrier, must establish a single maximum allowable cost list to use with each pharmacy provider to show the maximum amount to be paid by a health plan to a pharmacy for generic drugs or brand-name drugs that have a least one generic equivalent available. For any drug for which a generic equivalent is not available or a prescription drug is not included on the maximum allowable cost list, the carrier and PBMs must use the average wholesale price. For each pharmacy provider, a carrier or PBM must use one national drug pricing source during a calendar year and make it publicly accessible on the carrier or PBM’s website.

New Jersey Approves Act to Allow Hospitals to Provide Acute Care Outside of Their Facilities

The New Jersey Legislature approved Bill A4914 to establish the Hospital at Home Act and authorized the Department of Health to permit a hospital to provide acute care services to an individual outside of their licensed facility and within a private residence. The program must be consistent with the federal Centers for Medicare and Medicaid Services (“CMS”) Acute Hospital Care at Home Program.

Additionally, any insurance carrier offering health benefits in the state, including Medicaid and NJ FamilyCare programs, must provide coverage for acute hospital services by a credentialed provider delivered through the program. Any hospital with a waiver to operate under CMS’ federal program before the Act’s effective date would be fully integrated into the New Jersey program.

New Jersey Allows Certain Military Medical Trainings as Nursing License Credits

Approved Bill A2722 amends N.J.S.A. 45:11-23 et seq. to permit veterans to receive credit for completing certain military medical training programs towards requirements for licensure as a licensed practical nurse (“LPN”). The goal is to provide a path for honorably discharged veterans with applicable medical training from the military to become an LPN. The bill includes a list of 6 specific military training programs to count as credit for the licensure and allows the Department of Military and Veterans’ Affairs to determine other programs that may qualify. The programs include practical nursing, health care, or medic specialist training; medical technician corpsman training; aerospace training; and independent duty medical technician training.

New Jersey Raises Income Eligibility Limits for the State’s Senior Prescription Drug and Hearing Aid Programs

Approved Bill S3 amends N.J.S.A. 30:4D-20 et seq. to address concerns over drug prices and the Pharmaceutical Assistance to the Aged and Disabled Program ("PAAD"). The Bill seeks to benefit more seniors in the state and promote enrollment in both PAAD and the Senior Gold Prescription Program. The PAAD and Senior Gold Prescription Drug Discount programs are available to residents 65 years and older and those with disabilities.

As amended, the Bill increases the income eligibility limits for PAAD by $10,000 to $52,142 for single persons and $59,209 for combined income for married couples. The Bill also establishes a grant program within the Department of Human Services to support the hiring and training of Senior Save Navigators and assist residents in applying for such programs.

New Jersey Appropriates $3.6 Million to DHS for Pediatric Medical Day Care Service Providers

Approved Bill A5082 establishes an annually adjusted Medicaid per diem rate for pediatric medical day care services delivered by a provider offering on-site services under the Medicaid fee-for-service and managed care delivery systems. The increase makes the per diem reimbursement rate to equal 45% of the average Medicaid fee-for-service per diem rate of all pediatric skilled care nursing facilities in the state. The State also appropriated $3.6 million to the Department of Human Services for payment to pediatric medical daycare providers in order to comply with the requirements of the Bill.

Nevada Court Issues Significant Guidance on the Interpretation of ALTA HOA Endorsements

Posted on by Christie Bowness

On October 12, 2023, the Supreme Court of Nevada (“the Court”) issued an important decision in the matter of Deutsche Bank National Trust Company v. Fidelity National Title Insurance Company, No. 84161, 2023 Nev. LEXIS 40 (Oct. 12, 2023), providing guidance on the interpretation and application of American Land Title Association (“ALTA”) and California Land Title Association (“CLTA”) endorsements 100(1)(a), 100(2)(a), and 115.2(2).

Background

In May 2004, James and Sharon Lutkin (“the Lutkins”) purchased real property in Mira Vista, Nevada (“the Property”), obtaining a mortgage from New Century Mortgage Corporation (“New Century”) as part of the purchase, with Fidelity National Title Insurance Company (“Fidelity”) issuing New Century a title-insurance policy covering both New Century and any of its subsequent assigns (“the Policy”).  After the Lutkins’ purchase was complete, New Century assigned Deutsche Bank National Trust Company (“Deutsche Bank”) a Deed of Trust to the Property.  The Property was part of a Homeowners Association (“the HOA”), and in 2011, the Lutkins failed to pay an assessment they owed to the HOA.  In August 2012, the HOA successfully foreclosed on the Property, took title, and sold the Property to G&P Investment Enterprises, LLC (“G&P), with G&P in turn selling the Property to TRP Fund VI, LLC (“TRP”) in July 2016.

The Policy

During G&P’s time owning the Property, Deutsche Bank sued G&P seeking a declaratory judgment that its Deed of Trust survived the HOA’s foreclosure.  G&P ultimately prevailed in this lawsuit, with the court finding that the HOA’s assessment lien had extinguished Deutsche Bank’s interest in the Property due to Nevada statute NRS 116.3116, the terms of which designate HOA assessment liens as “super-priority” liens that are treated as senior to a first Deed of Trust.  This provision also further provides that when such an assessment lien is foreclosed upon – as the HOA had done – the foreclosure operates to completely extinguish a Deed of Trust if one is present.

While this suit was ongoing, Deutsche Bank submitted a claim for defense and indemnification under the Policy, which contained the following two ALTA/CLTA endorsements: (1) the first, CLTA 115.2(2), insured losses sustained “by reason of . . . [t]he priority of any lien for charges and assessments at Date of Policy in favor of any [HOA] . . . over the lien of [the] insured mortgage”; and (2) the second, CLTA 100(1)(a), provided coverage for any losses sustained “by reason of . . . [t]he existence of any . . . covenants, conditions, and restrictions under which the lien of the mortgage . . . can be cut off, subordinated, or otherwise impaired” (both provisions collectively referenced as “the ALTA Endorsements”).

The Policy also included CLTA 100(2)(a), which covered any losses sustained “by reason of . . . [a]ny future violations on the land of any covenants, conditions, and restrictions occurring prior to acquisition of title to the estate or interest . . . by the insured, provided such violations result in impairment or loss of the lien of the mortgage . . . , or result in impairment or loss of the title to the estate or interest . . . if the insured shall acquire such title in satisfaction of the indebtedness secured by the insured mortgage.”

Additionally present in the Policy was a disclaimer providing that the endorsements contained therein were “made a part of the policy” and were “subject to all of the terms and provisions thereof and of any prior endorsements thereto,” and a disclaimer stating that the endorsements “neither modif[y] any of the terms and provisions of the policy, nor . . . extend the effective date of the policy and any prior endorsements, nor . . . increase the face amount thereof.”

The Claim Denial

Ultimately, Fidelity denied Deutsche Bank’s claim on the basis that the HOA lien did not come into existence and was not recorded until more than seven years after the Policy had been issued.  As the recordation of this lien operated to terminate Deutsche Bank’s interest, it followed that Deutsche Bank did not lose its interest until after the Policy date, and the claim thus fell within the Policy’s exclusions.  Additionally, Fidelity determined that neither of the ALTA Endorsements provided coverage because it was not an HOA covenant, condition, or restriction that had caused the HOA’s assessment lien to take priority over Deutsche Bank’s lien, but rather the operation of Nevada’s statute NRS 116.3116.

The Lower Court Lawsuit 

Deutsche Bank later brought suit against Fidelity contesting the coverage denial, alleging numerous claims including breach of contract and breach of the covenant of good faith and fair dealing.  As its basis for these claims, Deutsche Bank contended that NRS 116.3116 should be treated as having been implicitly incorporated into the HOA’s covenants, conditions, and restrictions, due to the NRS 116.3116 statute having been created in 1991, while the HOA’s terms were declared in 2000.  Deutsche Bank also produced title insurance trade manuals wherein Fidelity and other insurers had issued preliminary opinions stating they believed the ALTA Endorsements would potentially cover losses caused by super-priority HOA assessment liens.

Fidelity moved to dismiss on the same basis as its claim denial, with the lower court agreeing and dismissing Deutsche Bank’s claims.  In doing so, the lower court held that no coverage was owed under the Policy because the HOA assessment lien did not come into creation until the Lutkins became delinquent in 2011, and thus the lien constituted a post-policy lien outside the Policy’s scope of coverage.  As to Fidelity’s contentions regarding the incorporation of NRS 116.3116, the court held that this allegation was irrelevant, as the assessment lien could only come into existence if a homeowner failed to timely pay an assessment.

The lower court also concluded that neither of the ALTA Endorsements afforded coverage, holding that CLTA 115.2(2) only covered losses suffered due to a lien existing or arising as of the date of the involved title policy – in this case May 2004 – and was thus not applicable in this matter as the assessment lien arose in 2011.  As to CLTA 100(1)(a), the lower court held that because the endorsement did not expressly mention HOA assessment liens, it therefore did not cover losses from such liens, and further, that even if it potentially did, such protections would still not apply, as Deutsche Bank’s losses were caused by NRS 116.3116 and not an HOA covenant, condition, or restriction.  Finally, the lower court also held that CLTA 100(2)(a) was inapplicable, as the Lutkins’ failure to pay the assessments owed was not a “violation on the land.”  In reaching these holdings, the lower court also rejected Deutsche Bank’s trade usage evidence – the trade manuals and preliminary opinions – on the basis that they conveyed nothing more than uncommunicated, subjective intent that contradicted the Policy, which was an unambiguous contract.

The Appeal

Deutsche Bank later appealed the dismissal before the Court, with the Court affirming the dismissal as correct.  In affirming, the Court began with the non-applicability of CLTA 115.2(2), noting that under NRS 116.3116, an assessment lien does not come into existence until a missing assessment payment actually becomes due.  As the lien does not exist until such time, it follows that it cannot obtain its super-priority status at any time prior to its coming into existence.  The Court thus held that in this case, both these events – the arising/creation of the lien and its taking priority over the Deed of Trust via super-majority – occurred multiple years after the Policy date, thereby invalidating any claim for coverage.  Specifically, the Court held that “the applicability of CLTA 115.2(2) depends firstly on the existence of an assessment lien at the date of policy” and “depends secondly on whether that assessment lien, if in existence at the date of policy, has priority over the insured’s mortgage under NRS 116.3116.”  In this instance, as the “assessment lien that ultimately extinguished Deutsche Bank’s [D]eed of [T]rust did not exist until roughly seven years after the date of the [P]olicy . . . those losses [did] not fall within the scope of CLTA 115.2(2).”  The same was true regarding priority, as the HOA’s assessment lien only attained super-priority status “when the lien arose in 2011,” and thus, the lien’s priority displacing the Deed of Trust “arose roughly seven years after the [P]olicy date.”  Accordingly, the Court held that “there [was] no coverage for Deutsche Bank under CLTA 115.2(2).”

Turning to CLTA 100(1)(a), the Court held that for this endorsement to be triggered it was necessary for some aspect of an HOA covenant, condition, or restriction to have cut off, subordinated, or impaired the subject interest.  In this instance – as Fidelity had consistently argued – it was not an HOA term, but instead NRS 116.3116, that provided for both the subordination and ultimate destruction of the Deed of Trust.  Accordingly, there was no coverage under CLTA 100(1)(a).

Similarly, as to CLTA 100(2)(a), the Court observed that the “applicability of this endorsement presupposes that the losses resulted from a future violation of a” covenant, condition, or restriction, however, Deutsche Bank’s losses in this instance resulted “because NRS 116.3116 created a statutory lien . . . comprised of a super[-]priority portion that, when foreclosed on, extinguishe[d]” Deutsche Bank’s interest.  Without “this statute, the failure to pay the assessment obligations, even if resulting in an assessment lien by virtue of the” covenants, conditions, and restrictions “would not extinguish” Deutsche Bank’s interests.  Therefore, “the losses arose by reason of NRS 116.3116,” and because of this, no coverage was owed under CLTA 100(2)(a).

Therefore, based upon the above holdings, the Court affirmed the lower court’s dismissal.

Takeaways

This opinion provides important guidance on the manner in which courts will interpret and apply the language of ALTA/CLTA endorsements 100(1)(a), 100(2)(a), and 115.2(2).  First, as to 100(1)(a), for coverage to be triggered it must be the precise covenant, condition, or restriction itself that results in the infringement of an interest.  If there exists interplay with a statute or other outside authority, for a claim to be viable, there must be certainty that ultimate responsibility for the infringement does not rest with the outside authority.  Similarly, under 100(2)(a), no coverage will be owed unless the ultimate cause of the complained of loss is a covenant, condition, or restriction.  Finally, as to 115.2(2), coverage will only be triggered where both: (1) the lien in question was actually in existence prior to or as of the date of the policy; and (2) that same lien also impacted priority as of the date of the policy or earlier.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, James Mazewski at jmazewski@riker.com, Kevin Hakansson at khakansson@riker.com, or Kori Pruett at kpruett@riker.com.

New Jersey Statutory Update – Part I

Posted on by Christie Bowness

Our next few postings will consist of several Parts highlighting New Jersey statutes that impact healthcare and have been approved by the New Jersey Legislature and Governor.

New Jersey Paves the Way for Family Members of a Medicaid Enrollee to Become a Certified Homemaker-Home Health Aide

The New Jersey Legislature and Governor approved Bill S1307 to establish a program in which a Medicaid or NJ FamilyCare enrollee’s family member may be certified by the New Jersey Board of Nursing as a homemaker-home health aide. The family member must complete all training, testing, and other criteria to qualify. The enrollee must be under 21 years of age and qualify to receive home care services under Medicaid or NJ FamilyCare. Once the family member is certified, they may provide homemaker-home health aide services through a home care services agency under the direction of a registered nurse.

Healthcare Facilities to Implement Surgical Smoke Evacuation Policies

Approved Bill A256 requires healthcare facilities defined under the Act to implement policies to prevent exposure to surgical smoke by utilizing a smoke evacuation system during any procedure that generates surgical smoke from a surgical device. Under the bill, the appropriate smoke evacuation systems should be designed to “capture, filter, or eliminate” surgical smoke before it makes contact with any individual.  The law took effect on July 11, 2023.

Healthcare Heroes Violence Prevention Act

The New Jersey Legislature and Governor approved Bill A3199 amending N.J.S.A. 2C:44-1 which now makes it a criminal offense to intentionally threaten healthcare professionals or volunteers in an effort to intimidate them or interfere with their work. Under the bill, a person who knowingly and willfully makes, sends, or delivers a threat against any healthcare professional, healthcare facility, employee of a healthcare facility, or volunteer is guilty of a disorderly persons offense. The penalties include up to 6 months in prison under N.J.S.A. 2C:43-8 and/or a fine up to $1,000 under N.J.S.A. 2C:43-3. Additionally, anyone convicted of assaulting a covered healthcare worker faces up to 12 months of an anger management course and up to thirty days of community service.

New Jersey Creates Fund for Proceeds from Opioid Settlements to Address Epidemic

The New Jersey Legislature and Governor approved Bill S783 to establish an Opioid Recovery and Remediation Fund, which requires the State Treasurer to deposit into the fund the State’s share of moneys received from opioid litigation resolutions. The Bill also establishes an advisory council to consult with the Department of Human Services on the allocation and disbursement of the fund. The Bill aims to support treatment and recovery programs for opioid use disorders and other co-occurring substance use disorders or mental health conditions, as well as connections to care, supporting research, and educating law enforcement and first responders.

New Jersey Dedicates Permanent Commission to Improving Alzheimer’s and Dementia Care

Approved Bill S1033 establishes the Alzheimer’s and Dementia Care Long-Term Advisory Commission within the Department of Human Services to provide for ongoing evaluations of the State’s care system for Alzheimer’s disease and related dementia conditions. The Commission is charged with identifying methods to address the weaknesses in the care system and prepare to meet the increasing needs of people living with these disorders and evaluate existing programs, services, facilities, and agencies. The 12-member Commission will include medical professionals, caregivers, government representatives, and other industry professionals.

Second Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications

Posted on by Christie Bowness

On October 10, 2023, the Federal Drug Enforcement Administration (“DEA”), in concert with the Department of Health and Human Services (“HHS”), published 88 FR 69879, which set forth a temporary rule extending COVID-19 flexibilities for the prescription of certain controlled substances. This is the second extension of such flexibilities. The first extension was issued on May 1, 2023. This second extension allows the flexibilities to the end of 2024.

The exceptions that were extended include flexibilities for prescribing Schedule II-V controlled medications, including buprenorphine, pursuant to the practice of telemedicine in instances where the prescribing practitioner has never conducted an in-person medical evaluation of the patient. These exceptions were originally developed during the COVID-19 pandemic to avoid lapses in care for patients. After the DEA conducted telemedicine listening sessions in September 2023, the DEA formally opted to extend this temporary rule on May 1, 2023 to avoid difficulties and gaps in care as it considers revisions to new rules. For details with regards to the flexibilities, see Riker Danzig’s blog post from May 2023. With this second extension, providers can continue to use telemedicine to prescribe certain controlled substances through the end of 2024.

The DEA reasoned that the temporary rule’s purpose is “to ensure a smooth transition for patients and practitioners that have come to rely on the availability of telemedicine for controlled medication prescriptions, as well as allowing adequate time for providers to come into compliance with any new standards or safeguards.” The DEA also noted that it is working to promulgate new standards or safeguards by the fall of 2024.

The full text of the temporary rule can be found here.

CMS’ Proposed Drug Pricing Transparency Rule Impacting PBMs and Other PBM Updates

Posted on by Christie Bowness

The United States Centers for Medicare & Medicaid Services (“CMS”) has proposed new rulemaking (88 FR 34238) to increase drug price transparency by drug manufacturers and pharmacy benefit managers (“PBMs”). Specifically, the proposed rule seeks to increase drug pricing transparency by:

  1. establishing a Medicaid drug price verification survey which would require manufacturers to submit certain detailed pricing information to CMS;
  2. requiring PBMs to report the cost of dispensing and administering drugs to managed care plans separately from any additional costs charged by the PBM; and
  3. granting CMS increased oversight of drug classifications in Medicaid and the ability to require corrective actions from manufacturers if a drug is incorrectly classified as brand name rather than generic.

Significantly, the proposed rule would grant CMS the discretion to publish non-proprietary drug pricing information reported to it by a drug manufacturer or a PBM. Manufacturers and PBMs that fail to provide specific information or decline to provide the information requested would be referred to the U.S. Department of Health and Human Services (“HHS”) Office of the Inspector General for possible imposition of civil monetary penalties.

A fact sheet for the CMS proposed rule may be accessed here.

CMS’ proposed rule follows a growing trend among state governments seeking greater pricing transparency from drug manufacturers and PBMs. Florida recently passed its Prescription Drug Reform Act, which institutes regulatory best practices for PBMs operating in Florida and grants Florida the authority to examine and investigate PBMs for possible rule violations. Similarly, earlier this year New Jersey enacted statutes aimed at promoting drug pricing transparency by (i) establishing a new data and transparency system within the Division of Consumer Affairs to collect, analyze, and report on the entire process of drug pricing across the supply chain (S-1615); and (ii) increasing state oversight of PBMs by requiring licensure by the NJ Dept. of Banking and Insurance (“DOBI”) and regulating PBM usage of rebates (A-536).

Some state laws seeking to regulate PBMs have faced challenges such as Oklahoma Patient’s Right to Pharmacy Choice Act (“PRCA”). Enacted in 2019, the PRCA broadly sought to regulate the activities of PBMs by, among other things, establishing any willing provider (“AWP”) requirements, restricting certain discount strategies, and empaneling an Oklahoma Insurance Department advisory committee to oversee PBMs. However, the Tenth Circuit recently invalidated several provisions of the PRCA due to preemption by the federal Employee Retirement Income Security Act ("ERISA") and Medicare Part D. Specifically, the Tenth Circuit invalidated the following PRCA provisions:

  • Access Standards: Requiring PBMs to ensure that certain percentages of their retail pharmacy network beneficiaries live within stipulated distances of an in-network and/or preferred pharmacy.
  • AWP Provision: Requiring PBM pharmacy networks to admit providers at preferred participation status level if the provider is willing to accept the corresponding terms and conditions.
  • Discount Prohibition: Prohibiting PBMs from restricting an individual’s choice of in-network pharmacy and PBM use of cost-share/copay discounts to incentivize in-network pharmacies.
  • Probation Prohibition: Prohibiting PBMs from denying, limiting, or terminating a pharmacy’s contract based on the probation status of a licensed pharmacist employed by the pharmacy.

Connecticut Appeals Court Affirms Title Insurer Had No Duty to Defend

Posted on by Christie Bowness

On March 21, 2023, the Connecticut Appeals Court (“the Court”) issued its opinion in the matter of Stewart v. Old Republic Nat’l Title Ins. Co., 291 A.3d 1051 (Conn. App. Ct. 2023), affirming the grant of summary judgment to Defendant Old Republic National Title Insurance Company (“Old Republic”) and the dismissal of Plaintiffs Jeffrey Stewart, Andrea Stewart (“the Stewarts”), and 9 Byram Dock, LLC’s  (“the LLC” and together with the Stewarts “Plaintiffs”) claims that Old Republic was required to afford them a defense under title insurance policies they had purchased.

Background

The Easement Dispute

In 2013 and 2014, Plaintiffs purchased two neighboring real properties located on Byram Dock Street in Greenwich Connecticut (“the Properties”), with Old Republic issuing title insurance policies in connection with these transactions.  In 2016, neighbors to the Properties brought suit against the LLC, alleging it had obstructed an easement allowing for the private use of a portion of the street by extending its lawn, installing a raised drainage system, and removing a pillar that marked the private and public portions of the street.  The LLC initially retained counsel to defend this suit without informing Old Republic, before later filing a Notice of Claim advising of the pending action and seeking defense and indemnification.  Old Republic subsequently denied the LLC’s claim on the basis that the title policy insured only the LLC’s right to ownership and good title, which was not in dispute and which the easement-related allegations could not implicate.

The Cemetery Dispute

In a separate 2016 incident, the Town of Greenwich Conservation Commission (“the Commission”) recommended that the Town of Greenwich (“the Town”) acquire an abandoned cemetery that a portion of the Stewarts’ driveway was believed to pass over, advising the Town that it was entitled to do so by General Statute § 19a-308a which vested municipalities with authority to “acquire an abandoned cemetery, including ownership of any occupied or unoccupied lots or grave sites in such cemetery.”  The Town proceeded with this plan and published a public notice advising of its proposed acquisition.  In response, the Stewarts sued the town – again without notifying Old Republic – seeking a declaratory judgment to quiet title regarding the portion of their driveway.  Ultimately, it was agreed that the Town would acquire the cemetery and then quitclaim the driveway back to the Stewarts.  Subsequently, the Stewarts filed a claim with Old Republic seeking to recover the fees they had expended in this litigation, with Old Republic disclaiming coverage because it had never approved the Stewarts’ suit or fees, and also because the Stewarts’ title policy expressly excluded actions resulting from exercises of governmental police power or condemnation.

The Appeal

Following the above denials, Plaintiffs brought suit against Old Republic alleging that each denial constituted a breach of Old Republic’s title policies.  Old Republic ultimately obtained the dismissal of these claims via summary judgment, which Plaintiffs then appealed before the Court.

On appeal, the Court affirmed the grant of summary judgment.  Beginning with the easement dispute, the Court held that the neighbors’ easement claims had no potential bearing on the validity of the LLC’s title, as their complaint contained no allegation that they or anyone else possessed an adverse ownership interest in the land underlying the easement.  Simply put, since the complaint did not include allegations potentially impacting title or ownership, the grant of summary judgment was warranted.

As to the cemetery dispute, the Court held that the Town’s acquisition of the cemetery never constituted an attempt to impact the Stewarts’ title to the property, as the ultimate determination of whether there was a cemetery on the property merely constituted a condition of the property, and not a matter of title.  Additionally, the Court held that the Town’s acquisition of property under General Statute § 19a-308a constituted both an exercise of governmental police power and an acquisition via condemnation, and thus, the title policy’s exclusions for these manner of actions operated to relieve Old Republic of any duty to defend.

Takeaways

This opinion demonstrates that a title policy does not, absent express language to the contrary, protect an insured against allegations that the insured’s use of its land infringes on other parties’ easement rights.  It also illustrates that an insured’s initiation of litigation to determine whether a municipality can acquire a portion of the covered property via either governmental police power or condemnation will not trigger coverage under a standard title insurance policy.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, James Mazewski at jmazewski@riker.com, Kevin Hakansson at khakansson@riker.com, or Kori Pruett at kpruett@riker.com.

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